Refurbishment change

A recent report from Savills highlights the changing nature of office schemes in regional cities.

Rising construction costs and slim margins are pushing developers towards refurbishments and the new trend is for a higher quality of refurbishments according to Savills. Nearly 40% of the pipeline of office schemes in regional cities will be delivered in the form of refurbishments.

A sustained level of demand for space in many of the regional cities alongside a lack of new office schemes, is boosting demand for refurbished office space. Landlords are turning to refurbishments to capture lettings from professional occupiers including lawyers, accountants and engineering firms.

As an example, Helical’s ongoing refurbishment of Churchgate House in Manchester which has transformed the building from part-occupied and unattractive to now being fully let. Occupiers have been attracted by a new reception incorporating touch down space, collaborative working areas and a high quality cafe.

Aviva is refurbishing 11 Portland Street, Manchester, which will provide single floors of up to 20,000 sq ft. The major refurbishment incorporates an entirely new principal reception area which has been repositioned to the corner of Portland Street and Aytoun Street.

Savills expect Bristol to be the next city to see a step change in demand for refurbished office space, driven by both a shortage of new build office space.

Metropolis has published business leads on 160 planned office schemes in London and regional cities over the last six months including details of developers and architect contacts, as well as timescales and any pre-lets. In addition Cityoffices.net includes details of all pipeline schemes, with full contact names and numbers.

Leeds Lettings Surge

A recent office market report on Leeds by Colliers International highlighted a surge of letting activity towards the end of 2015. Office take-up for the Q4 2015 reached 267,000 sq ft (just below the quarterly record) and the total of office deals for 2015 reached over 680,000 sq ft. Around 60% of 2015 was Grade A newly constructed or refurbished space.

The most high profile transactions in 2015, most of which were tipped in advance by Metropolis, included Sky’s 97,000 sq ft deal at Leeds Dock; Addleshaw Goddard pre-let 51,000 sq ft at 3 Sovereign Square and PWC preletting 50,000 sq ft at Central Square,. Legal and financial services accounted for 33% of take-up in 2015, followed by technology and media on 23%. Prime rents are around £27 psf and predicted to rise in 2016.

The Metropolis database reveals nearly 50 outstanding office requirements in Leeds including IPF, RSM and Jet2 with substantial requirements. In total, the fifty firms are currently searching for over 400,000 sq ft of office space in the city, with another 30 firms due to make decisions ahead of lease expiries in 2016 and 2017. Lease expiries are triggering 60% of current relocations.

The availability of grade A office space, newly constructed or refurbished, has fallen to a five year low at 5% and only 7.75 across all grades. More than 530,000 sq ft of new office space is due to be completed shortly including 6 Queen Street; Central Square; Sovereign Square and 6 Wellington Place. Manchester and Leeds have the two most active office construction markets in the UK outside London.

The five new build schemes in Leeds city centre are 30% pre-let with other pre-commitments in negotiation. A number of refurbishments are also underway such as 6 East Parade (45,000 sq ft) and Concordia Works (14,000 sq ft) . Looking ahead, Cadddick Developments has secured planning for a mixed use scheme at Quarry Hill, which will include 107,650 sq ft of offices and BAM have gained consent for another phase of Latitude.

Cityoffices – Offices Taking Off

The 15 year old website http://www.Cityoffices.net is the sister leads provider to the market leading Metropolis Property Research.

With the office construction sector booming in London and awakening in UK regional cities, there is a huge volume of tenders being sought and awarded as every role from architects, planners and engineers to service consultants, letting agents and acoustic consultants are being appointed on a daily basis.

Looking back over September 2015 this Cityoffices bulletin just looks at news of some of the schemes (there are 120 schemes at either construction or demolition stage in London, with over 200 planning consents in the pipeline) which have progressed in the last month and some of the schemes which developers are likely to progress in the next 2-3 years. The 25 London news stories and many regional updates in September, are backed up with full project details, including teams where appointed, on the database and included:

In London

  • Demolition started at a major mixed use site in Victoria, SW1;
  • a Southbank office block was put up for sale, with tenants vacating in mid-2016, Development team to be appointed;
  • a new planning application for a mid-size refurbishment close to the Bank of England;
  • a new start on a mixed-use scheme in Bloomsbury;
  • a historic island site demolition in Midtown to provide a new office scheme;
  • consent for a refurbishment of a large former publishers office in EC4;
  • a major Mayfair office development gets underway;
  • news of the latest major pre-lets on office schemes in central London

Outside London

  • Consent for major central Birmingham scheme;
  • Liverpool sees its largest Grade A letting of the year;
  • Manchester application to redevelop a former law firm’s offices;
  • application for a Bristol science research centre building;
  • contractor appointed to refurbish a Glasgow office scheme;
  • new application in Leeds to refurbish and extend a block due to be vacated in 2016;
  • phase 2 of a successful Newcastle scheme
  • major Edinburgh scheme is pre-let

These are just a sample of the many office projects that Cityoffices reports on each month and backed up with full histories and contact names and numbers where available. No other information provider can match a fraction of Cityoffices’ coverage.

If you would like to know more about annual Cityoffices subscriptions from only £750 email Andy King at andy@metroinfo.co.uk

Cityoffices relaunched

In January 2015 Metropolis’ sister site: http://www.cityoffices.net has been revamped and relaunched as THE place to learn about office schemes in London and the UK.

Since 1999 Cityoffices has been monitoring, qualifying and recording all significant office developments in London and across the regions. Cityoffices averages over six news stories on London office schemes every week for subscribers, plus other news of developments in the regions.

From the first peep that a development might be in the pipeline, through the design, planning and construction phases, followed by completion to the deals struck by occupiers to occupy it. The site notes all the activity around each and every scheme of note. There are over currently 1000 on the database, of which 300 are future schemes in the pipeline.

Cityoffices record all the participants from developer, to agent, to architect, to the complete construction team.

Cityoffices also track all rumours, hints and realities of the development letting process. For example if a building is purchased with a view to refurbishment or redevelopment you’ll hear about it on Cityoffices. Cityoffices also gives a monthly commentary on London office take-up with trends and demand statistics.

If you want to track the development history of any office building constructed in the last 16 years in London, then Cityoffices is the place. If you want to see what may be built in the next three years and the companies involved (many with contact names) in each scheme Cityoffices is the place. If you want to be informed about the latest news on office schemes, Cityoffices is the place.

In short, CityOffices gives you the complete low down on the market and allows you to be an informed player.

Subscriptions begin at a very reasonable £600 per annum. Email andy@metroinfo.co.uk for more details.

London Lettings On The Rise

Central London office lettings in June 2014 reached 1,150,000 sq ft in 70 medium or large deals, as the market saw another above the long term average month for office transactions.

The quarterly total was 3.4m sq ft and the first half of the year totalled 6.5m sq ft. June was characterised by large lettings to China Construction Bank and Clarksons amongst others. Financial and media sectors were strong performers. By area, the City accounted for less than 500,000 sq ft of the June deals total, however Midtown and Southbank were strong contributors. However across the quarter the EC2 area was the strongest postcode.

The strength of the Central London office market in the first half of the year is likely to translate into a full year lettings total of around 13m sq ft. There were eleven transactions over 50,000 sq ft in the quarter including  Mizuho Corporate Bank and Estee Lauder. The City accounted for 1.4m sq ft of lettings in Q2 2014 and during the last three months as a whole there were 1.9m sq ft of grade A lettings. There are a number of large lettings in the pipeline with upto 3m sq ft of space under offer. The largest space under offer is 370,000 sq ft at Bankside, SE1 to media group Omnicom.

There are currently 7-8m sq ft of active London requirements on the Metropolis database and a further 2-3m sq ft of potential requirements in the pipeline. The insurance sector is tipped as one of the most active likely to sign deals in the second half of 2014.